No Jobs For Americans

March 12, 2012

Institute For Political Economy

By Paul Craig Roberts

The Bureau of Labor Statistics (BLS) announced that 227,000 new nonfarm payroll jobs were created by the economy during February. Is the government’s claim true?

No. Statistician John Williams (shadowstats.com) reports that 44,000 of these jobs or 19% consist of an add-on factor derived from the BLS’s estimate that 44,000 more unreported jobs from new business start-ups were created than were lost by unreported business failures. The BLS’s estimate comes from the bureau’s “birth-death model,” which works better during normal times, but delivers erroneous results during troubled times such as the economy has been experiencing during the past four years.

Taking out the 44,000 added-on jobs reduces the February jobs number to 183,000, but does not provide a full correction. In an economy as troubled as the US economy is, most likely the deaths exceeded the births, but we don’t know what the number is. Was it 20,000? 50,000? What number do we deduct from the 183,000? We simply do not know.

Williams reports that seasonal adjustment factors do not work properly during troubled economic times and add their own overstatement to the jobs figure. If anyone could estimate the overestimate of new jobs that results from malfunctioning seasonal adjustments, it is John Williams, but he doesn’t provide an estimate.

Most likely, the new jobs did not exceed 150,000, a figure that would merely keep even with population growth and thus not reduce the rate of unemployment, which, consistent with this deduction, remained constant.

Let’s look now at the kind of jobs that were created. Of the new jobs reported by BLS,
92% are in services. Of this 92%, only 7% could possibly relate to exportable services–architectural, engineering, and computer systems services.

Of the reported new service jobs, 29% are in health care and social services. The categories that account for the health services jobs are ambulatory health care services and hospitals. Waitresses and bartenders account for 20% of the reported new jobs.

Click here for the full report.

Recent Employment Numbers Are A Lie

February 6, 2012

USA Watchdog

By Greg Hunter

The most recent unemployment number is a total lie, and that lie was repeated all over the mainstream media (MSM). Two sins were committed here, and I don’t know which one is worse. The report was a sham, and the MSM reported that information without a single question about its accuracy. In a story carried across the MSM spectrum, the Associated Press said, “In a long-awaited surge of hiring, companies added 243,000 jobs in January – across the economy, up and down the pay scale and far more than just about anyone expected. Unemployment fell to 8.3 percent, the lowest in three years.” The report went on to say, “At the same time, the proportion of the population working or looking for work is its lowest in almost three decades. The length and depth of the recession have discouraged millions of people from looking for jobs. The better news of the past couple months has not yet encouraged most of them to start searching again.”

Here’s a headline for you. If it were not for accounting gimmicks and what the government calls “seasonal-adjustments,” the unemployment rate would have gone up, not down! In his latest report, economist John Williams from Shadowstats.com said, “January’s unadjusted unemployment rate rose to 8.8% . . . The only difference between those numbers and the headline 243,000 January jobs gain and 8.3% unemployment rate, is how the seasonal adjustments were applied. There are serious issues with the current quality of those adjustments, and extremely small distortions in those seasonals can make big differences in the resulting headline data.”

As far as “discouraged” workers who are not looking for a job, that is total rubbish put out by the government. The real story is the Bureau of Labor Statistics (BLS) simply has stopped counting more than 1.2 million of the unemployed in its report Friday. Williams goes on to say, “The issues here suggest that the headline 8.3% unemployment for January has moved well outside the realm of common experience and credibility, into the arena of election-year political shenanigans.” Williams is such a gentleman. Please take into consideration the government’s “official” or “headline” number is only based on people being out of work for 6 months or less. If the unemployment rate was calculated the way BLS did it in 1994 and earlier, the unemployment and underemployment would be 22.5%.

Click here for the full report from USA Watchdog.

8.3% Unemployment Lie

February 6, 2012

USA Watchdog

By Greg Hunter

“They are lying to you again. Did you really expect anything else?” –KTRN

The most recent unemployment number is a total lie, and that lie was repeated all over the mainstream media (MSM). Two sins were committed here, and I don’t know which one is worse. The report was a sham, and the MSM reported that information without a single question about its accuracy. In a story carried across the MSM spectrum, the Associated Press said, “In a long-awaited surge of hiring, companies added 243,000 jobs in January – across the economy, up and down the pay scale and far more than just about anyone expected. Unemployment fell to 8.3 percent, the lowest in three years.” The report went on to say, “At the same time, the proportion of the population working or looking for work is its lowest in almost three decades. The length and depth of the recession have discouraged millions of people from looking for jobs. The better news of the past couple months has not yet encouraged most of them to start searching again.” (Click here for the complete AP story.)

Here’s a headline for you. If it were not for accounting gimmicks and what the government calls “seasonal-adjustments,” the unemployment rate would have gone up, not down! In his latest report, economist John Williams from Shadowstats.com said, “January’s unadjusted unemployment rate rose to 8.8% . . . The only difference between those numbers and the headline 243,000 January jobs gain and 8.3% unemployment rate, is how the seasonal adjustments were applied. There are serious issues with the current quality of those adjustments, and extremely small distortions in those seasonals can make big differences in the resulting headline data.”

As far as “discouraged” workers who are not looking for a job, that is total rubbish put out by the government. The real story is the Bureau of Labor Statistics (BLS) simply has stopped counting more than 1.2 million of the unemployed in its report Friday. Williams goes on to say, “The issues here suggest that the headline 8.3% unemployment for January has moved well outside the realm of common experience and credibility, into the arena of election-year political shenanigans.” Williams is such a gentleman. Please take into consideration the government’s “official” or “headline” number is only based on people being out of work for 6 months or less. If the unemployment rate was calculated the way BLS did it in 1994 and earlier, the unemployment and underemployment would be 22.5% (according to Shadowstats.com.)

A recent report by a D.C. consulting firm estimates about 3 million long-term unemployed have been dropped from the unemployment statistics in the last few years. (Click here for that story.) The Obama Administration has predicted the “official” unemployment rate would be below 8% by the November 2012 election. Heck, if you stop counting enough people, you can get the unemployment rate down below 5%, and that will make the 15 million or so unemployed feel really good. Taxpayers are paying to be essentially hoodwinked by the BLS, and the mainstream media never questions these numbers.

Click here for the full report.

Lies, Damned Lies, and (Unemployment) Statistics

December 5, 2011

SHTFPlan.Com

By Mac Slavo

Mainstream media and Wall Street are salivating over the Bureau of Labor Statistics’ latest job growth numbers, which suggest that unemployment is on its fastest decline since the recession began in 2008:

MSNBC: Employment growth picked up speed in November; jobless rate fell to 8.6 percent

Employment growth picked up speed in November, pushing the nation’s unemployment rate down to 8.6 percent — its lowest level since March 2009.

…

Private employers added a net gain of 140,000 jobs in November, but governments shed 20,000 jobs, mostly at the local and state level. Governments at all levels have shed nearly a half-million jobs in the past year. The Labor Department revised up its job gains for September and October by 52,000 and 20,000, respectively.

“The labor market is gradually healing. It’s a glacial pace, but we are taking small steps in the right direction,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Penn.

If you stopped reading right there you’d think our government’s stimulus infused, debt ridden interventionist policies have solved the worst crisis since the Great Depression.

There are three kinds of lies, wrote Mark Twain in 1906, “lies, damned lies, and statistics.” Take a page from his book and consider that the latest unemployment report is nothing more than an attempt by the custodians of our government, who are increasingly coming under fire from the populace, to hide the fact that their grand plans for centralizing social, financial and economic control are failing miserably.

The Head Lies could have just as easily read “315,000 give up searching for jobs and officially leave the workforce,” but that doesn’t play into the narrative, and we need to maintain appearances. How else are we supposed to keep the Dow Jones cranking amid a collapsing global economy?

This is a warning to our readers that trusting the Bureau of Labor Statistics could be dangerous to your financial health and personal well being.

Here are six reasons why these numbers, although seemingly positive at first glance, don’t hold a lot of weight for the nation’s long-term out look.

1) Tens of thousands of people have given up searching for work, so they don’t count as part of the labor force anymore

When people stop looking for work they are considered to no longer be participating in the labor force, which means that the BLS ratios are adjusted to reflect a better overall employment rate:

Click here for the full report.

Are Unemployment Rates Really Going Down?

March 3rd, 2011

AOL Jobs

By: Al Lee

How accurate is the unemployment rate? As it goes up and down each month it causes a lot of people, particularly those looking for work, quite a bit of stress. Do you ever wonder if it can really be trusted? Or, whether it matters for you and your job security? Let’s look at why and why not.

The unemployment rate is a complicated calculation, and it gets more complicated during times of economic turmoil. This is because the Bureau of Labor Statistics, which calculates the unemployment rate, makes certain assumptions about the number of working-age people in the economy during certain seasons of the year and creates a “seasonally adjusted” number. That’s the one you hear about in the news.

But, this adjustment may not be as accurate when the economy is struggling.

Why does the BLS adjust employment numbers for seasonality?

Nearly every year, the unemployment rate spikes in January and June, with unemployment up about 1 percent in January over December, and up about 0.5 percent in June over May.

The reasons for these spikes are simple. A lot of temporary retail workers that had a job in December for the holidays are unemployed in January. Similarly, about 4 million students graduate from high school each June and go from being “employed” as students in May to “unemployed” workers looking for work in June.

These seasonal adjustments are critical to understanding where the economy is going. They make for more accurate comparisons from month to month so we don’t all freak out every January and June. Let’s see how they affected our results for January 2011.

At the beginning of February 2011, you likely heard in the news that, “The January 2011 BLS report states that the unemployment rate fell by 0.4 percentage points to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000).” Hearing this, you may have thought, “Wow, that’s great news.” You were celebrating the seasonally adjusted number.

Had you heard the unadjusted statistics explained, you may not have been so happy. You would have heard something like, “The January 2011 unemployment rate of 9.8 percent was 0.7 percent higher than the rate for December. Similarly, January nonfarm payroll employment was down 2.9 million from December’s number.” Uh-oh, that’s all bad news.

The adjustments can help keep actual statistics in perspective, but they are harder to make during a recession because, if the retail sector is dead, for example, there is no significant increase in unemployment in January for retail workers, because there wasn’t an increase in employment for these workers in December, as in typical years.

The result is that the BLS does the best it can to figure out which changes in unemployment are long term, and which are just seasonal variations. It just can’t do a great job in strange times like these, so the BLS sometimes produces reports, like January’s, that may not provide a clear picture of how the employment situation is really faring. It’s hard to say.

What should you do?

1. Try to not focus too much on the unemployment numbers you read. Know that they are full of uncertainty.

2. Don’t read too much into one month’s seasonally adjusted result.

3. Look at the raw (not seasonally-adjusted) unemployment rate for a month compared to the rate in the same month the year before (year-over-year rather than month-over-month). This gives a clearer picture of where we really are with unemployment.

Click here for the full report from AOL Jobs

The Worrisome Stats Official Inflation Figures Aren’t Showing

January 17th, 2011

Daily Finance

By: Charles Hugh Smith

On the surface, the outlook for inflation this year appears tame. The consumer price index (CPI) registered a modest 1.5% in 2010, and the so-called “core” inflation gauge, which excludes food and energy, grew a mere 0.8%.

But looks might be deceiving. Beneath the low CPI reading, the producer price index has been rising at a rate of 4%, and the costs of intermediate goods in the middle of the supply chain climbed by 6.5% in December alone.

That wasn’t an anomaly: The cost of intermediate goods floated more than 5% higher, year over year, in 11 out of 12 months, and it exceeded 6% growth in eight months, hitting a high of 8.7% growth in April 2010.

Fed Chairman Ben Bernanke may well be correct about companies being unable to pass on higher producer costs, but he didn’t address the skyrocketing costs of raw materials — what the Bureau of Labor Statistics calls “crude goods.” As this chart from the bureau indicates, the cost of these crude goods has grown by 15% or more throughout 2010, far above the 4% producer price index increase or the minimal CPI advance.

The implication from these numbers is ominous. If companies selling finished goods can’t raise retail prices, but the cost of raw materials and intermediate goods in the supply chain are rising by 15% and 6.5%, respectively, that means manufacturers’ profit margins will become increasingly squeezed. It’s basic math: If your costs rise but the price you charge customers remains unchanged, your profit margins shrink.

And that’s bad news for the stock market. The current market rally is based, not just on an improving economy but more specifically on rising corporate profits. Growing producer costs and raw-materials costs could crimp those profits, spelling trouble for the stock rally.

In other words, the rising costs of basic and intermediate goods doesn’t just threaten to burden consumers with higher prices, it also threatens to cut into the fat profit margins that have been driving the stock rally for almost two years.

Energy and Medical Costs Also on the Rise
As if rising commodity and supply chain costs weren’t worrisome enough, energy costs also are skyrocketing. Gasoline prices rose 8.5% in December alone, and overall energy costs grew a sobering 13.9%. Energy is consumed at every step of the global supply chain, so higher energy costs end up adding raising the costs for everything: grain, transport, manufacturing, chemicals, you name it. While bad weather is certainly the primary mover of grain prices, higher energy costs certainly aren’t helping food commodity prices, which hit 2.5-year highs, triggering global protests.

Click here for the full report from Daily Finance

WH Jobs Summit: Progress or PR Stunt?

December 3, 2009

ABC News

by Mattew Jaffe and Karen Travers

Is the White House jobs summit an event that will spur tangible actions or simply a glorified public-relations stunt?

Some are asking that question as the White House on Thursday hosts a slew of the country’s best and brightest business executives, finance experts, economists, small business owners and labor leaders to discuss ways to generate job creation.

“The president’s really looking forward to having a wide cross section of people from small, medium and lagre businesses,” senior White House adviser Valerie Jarrett told “Good Morning America’s” Robin Roberts today. “All coming together and working with him and his economic team to see if we can come up with some new, fresh ideas to help jumpstart the economy.”

With the country dealing with its highest unemployment rate in 26 years, the administration is under pressure to get Americans back to work. While unemployment is traditionally a lagging indicator — taking longer to turn around than the stock market and other economic indicators — time is of the essence.

“We inherited an economic meltdown 10 months ago when he took office. He moved boldly to get us back on track with a variety of measures. We still have an unemployment rate that is far too high,” Jarrett said. “He thinks today is a great opportunity to bring in new fresh ideas.”

As President Obama has said, “We will not rest until we are succeeding in generating the jobs that this economy needs.”

The jobs summit, announced a week after the Bureau of Labor Statistics said unemployment reached 10.2 percent, is the administration’s latest effort to do just that, but some critics say it’s little more than a publicity stunt.

“We’re not going to get anything useful out of it,” said Peter Morici, professor at the University of Maryland’s Smith School of Business.

The president and his treasury secretary, Tim Geithner, “really don’t know what to do,” Morici said.

The White House characterizes the summit as a listening opportunity, a chance for Obama and his economic team to hear directly from key business leaders their ideas on how to get Americans back to work.

“I would say to those critics, we welcome your ideas,” Jarrett said. “We embrace all good ideas and I think critics should stop saying what won’t work and come forward with what will work.”

The president and vice president will deliver remarks to open the forum and then members of the Cabinet will hold smaller working sessions on job creation, economic growth and green jobs.

“There are companies that are out there that are expanding. … We have a variety of different ways we can really drill down and come up with concrete new ideas,” Jarrett said, adding that the discussions in the job summit will focus on infrastructure, small jobs, exports, green jobs and “innovative ways to retooling our workforce.”

In the coming weeks, “the president will be embracing those ideas, working with Congress if legislation is necessary,” she added. “We do everything we can each and every day to bring down that unemployment rate.”

White House Press Secretary Robert Gibbs said on Wednesday the government alone cannot create jobs to get the economy moving again.

“That’s the private sector,” he said. “What I think the president wants to do is hear from them on the type of environment that we can have that would allow for that hiring to take place.”

The White House will carry the event live on its Web site at www.whitehouse.gov/live.

The Obama administration also wants regular Americans to contribute ideas to the discussion, and encourages citizens to hold their own forums in their community. The White House will send discussion questions and other material to facilitate the discussions. Hosts then can upload feedback to the White House Web site, where it will be compiled into the forum’s report to the president.

Still, Morici said that the summit is another example of Washington trying to fix problems with meetings.

Click here for full report

The Economy Is Even Worse Than You Think

July 14, 2009

Wall Street Journal

by Mortimer Zuckerman

The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.

The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

Here are 10 reasons we are in even more trouble than the 9.5% unemployment rate indicates:

- June’s total assumed 185,000 people at work who probably were not. The government could not identify them; it made an assumption about trends. But many of the mythical jobs are in industries that have absolutely no job creation, e.g., finance. When the official numbers are adjusted over the next several months, June will look worse.

- More companies are asking employees to take unpaid leave. These people don’t count on the unemployment roll.

- No fewer than 1.4 million people wanted or were available for work in the last 12 months but were not counted. Why? Because they hadn’t searched for work in the four weeks preceding the survey.

- The number of workers taking part-time jobs due to the slack economy, a kind of stealth underemployment, has doubled in this recession to about nine million, or 5.8% of the work force. Add those whose hours have been cut to those who cannot find a full-time job and the total unemployed rises to 16.5%, putting the number of involuntarily idle in the range of 25 million.

- The average work week for rank-and-file employees in the private sector, roughly 80% of the work force, slipped to 33 hours. That’s 48 minutes a week less than before the recession began, the lowest level since the government began tracking such data 45 years ago. Full-time workers are being downgraded to part time as businesses slash labor costs to remain above water, and factories are operating at only 65% of capacity. If Americans were still clocking those extra 48 minutes a week now, the same aggregate amount of work would get done with 3.3 million fewer employees, which means that if it were not for the shorter work week the jobless rate would be 11.7%, not 9.5% (which far exceeds the 8% rate projected by the Obama administration).

- The average length of official unemployment increased to 24.5 weeks, the longest since government began tracking this data in 1948. The number of long-term unemployed (i.e., for 27 weeks or more) has now jumped to 4.4 million, an all-time high.

- The average worker saw no wage gains in June, with average compensation running flat at $18.53 an hour.

- The goods producing sector is losing the most jobs — 223,000 in the last report alone.

- The prospects for job creation are equally distressing. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers back to full time. Many unemployed workers looking for jobs once the recovery begins will discover that jobs as good as the ones they lost are almost impossible to find because many layoffs have been permanent. Instead of shrinking operations, companies have shut down whole business units or made sweeping structural changes in the way they conduct business. General Motors and Chrysler, closed hundreds of dealerships and reduced brands. Citigroup and Bank of America cut tens of thousands of positions and exited many parts of the world of finance.

Job losses may last well into 2010 to hit an unemployment peak close to 11%. That unemployment rate may be sustained for an extended period.

Can we find comfort in the fact that employment has long been considered a lagging indicator? It is conventionally seen as having limited predictive power since employment reflects decisions taken earlier in the business cycle. But today is different. Unemployment has doubled to 9.5% from 4.8% in only 16 months, a rate so fast it may influence future economic behavior and outlook.

How could this happen when Washington has thrown trillions of dollars into the pot, including the famous $787 billion in stimulus spending that was supposed to yield $1.50 in growth for every dollar spent? For a start, too much of the money went to transfer payments such as Medicaid, jobless benefits and the like that do nothing for jobs and growth. The spending that creates new jobs is new spending, particularly on infrastructure. It amounts to less than 10% of the stimulus package today.

About 40% of U.S. workers believe the recession will continue for another full year, and their pessimism is justified. As paychecks shrink and disappear, consumers are more hesitant to spend and won’t lead the economy out of the doldrums quickly enough.

It may have made him unpopular in parts of the Obama administration, but Vice President Joe Biden was right when he said a week ago that the administration misread how bad the economy was and how effective the stimulus would be. It was supposed to be about jobs but it wasn’t. The Recovery Act was a single piece of legislation but it included thousands of funding schemes for tens of thousands of projects, and those programs are stuck in the bureaucracy as the government releases the funds with typical inefficiency.

Another $150 billion, which was allocated to state coffers to continue programs like Medicaid, did not add new jobs; hundreds of billions were set aside for tax cuts and for new benefits for the poor and the unemployed, and they did not add new jobs. Now state budgets are drowning in red ink as jobless claims and Medicaid bills climb.

Next year state budgets will have depleted their initial rescue dollars. Absent another rescue plan, they will have no choice but to slash spending, raise taxes, or both. State and local governments, representing about 15% of the economy, are beginning the worst contraction in postwar history amid a deficit of $166 billion for fiscal 2010, according to the Center on Budget and Policy Priorities, and a gap of $350 billion in fiscal 2011.

Households overburdened with historic levels of debt will also be saving more. The savings rate has already jumped to almost 7% of after-tax income from 0% in 2007, and it is still going up. Every dollar of saving comes out of consumption. Since consumer spending is the economy’s main driver, we are going to have a weak consumer sector and many businesses simply won’t have the means or the need to hire employees. After the 1990-91 recessions, consumers went out and bought houses, cars and other expensive goods. This time, the combination of a weak job picture and a severe credit crunch means that people won’t be able to get the financing for big expenditures, and those who can borrow will be reluctant to do so. The paycheck has returned as the primary source of spending.

This process is nowhere near complete and, until it is, the economy will barely grow if it does at all, and it may well oscillate between sluggish growth and modest decline for the next several years until the rebalancing of excessive debt has been completed. Until then, the economy will be deprived of adequate profits and cash flow, and businesses will not start to hire nor race to make capital expenditures when they have vast idle capacity.

No wonder poll after poll shows a steady erosion of confidence in the stimulus. So what kind of second-act stimulus should we look for? Something that might have a real multiplier effect, not a congressional wish list of pet programs. It is critical that the Obama administration not play politics with the issue. The time to get ready for a serious infrastructure program is now. It’s a shame Washington didn’t get it right the first time.

Click here for the full editorial from the Wall Street Journal.